(Source: http://www.vedomosti.ru/finance/news)

Despite the frequent statements by European politicians concerning the need for reducing dependence on Russian gas, the chances of doing this in Europe are few, as the Fitch Ratings’ declares in its report “Living Without Russian Gas”.

Gas consumption in the EU will increase, but there is no substitute for Russian gas, given the weak prospects for shale gas production, the lack of liquefied natural gas (LNG) available for import and the absence of significant European pipeline projects which would be independent of Russia.

Europe could theoretically reduce its dependence on Russian gas while reducing its consumption, but Fitch’s analysis shows that the demand for gas in the EU will only increase in the long term – by an average of 1.3% per year over the next 15 years. In 2013 the European demand for gas made up 530 billion cubic meters, Russia supplied 145 billion of them - 27%. Gas could be replaced by oil, coal or nuclear power, but all of these alternatives involve “economic, political or environmental costs”.

In addition, Russia is a significant supplier not only of natural gas, but also of oil, coal and nuclear fuels. In the past year Russia has covered 36% of the needs of European nuclear power plants in enriched uranium, and Bulgaria, Czech Republic, Slovakia and Hungary are 100% dependent on Russian fuel assemblies.

The projects in the field of renewable energy sources, such as wind or solar energy, are very expensive and cannot compete with conventional ways of power generation without significant government subsidies, as Fitch notes. In the long term Russia will stay the major supplier of gas to Europe, for there are not enough alternative sources, the report says.

The volume of conventional gas production in Europe steadily decreases, and the “shale revolution” after the United States scenario is impossible in Europe: stranded gas will, at the best, make up for the reduction of conventional production volume.